Khasawneh directs measures to address potential inflationary effects

Jordan

Published: 2024-01-14 15:00

Last Updated: 2024-04-20 14:28


Khasawneh directs measures to address potential inflationary effects
Khasawneh directs measures to address potential inflationary effects

Prime Minister Bisher Al-Khasawneh has instructed during his presidency of the Cabinet session today, Sunday, relevant ministries and authorities to take all necessary measures and actions to deal with the potential inflationary effects on the Jordanian market as well as the global market. 

This is due to the regional developments resulting from the ongoing Israeli Occupation aggression against the Palestinians in the Gaza Strip and the current tensions in the Red Sea.

Regional developments 

Al-Khasawneh said, "About 15 percent of the volume of international trade passes through the Bab el-Mandeb Strait. Due to the ongoing aggression of the Israeli Occupation against our brothers and people in the Gaza Strip, regional developments have occurred, leading some transport companies to perceive it as a risk to the continuity of their passage through the strait."

Al-Khasawneh added that according to international estimates, in addition to the estimates of the Ministry of Transport and the Ministry of Industry, Trade, and Supply, the costs of transport trucks have steadily risen by approximately 160-170 percent for trucks coming from Southeast Asia and often 60-100 percent for trucks and containers from North America and Europe. Additionally, the fees for insuring imported goods have also increased.

He pointed out that if this situation continues, it will have an inflationary impact. This is because commercial and industrial sectors operate on the basis of legitimate profit, and thus they will pass on the costs with profit margins.

When there is an increase, it is expected to reflect on the prices of goods and commodities "because the trader, rightfully so, does not perform a social function but operates on the basis of profit."

The prime minister emphasized that the private commercial, industrial, and tourist sectors, for the most part, have always borne a great deal of responsibility and accepted reasonable profit margins. 

Al-Khasawneh said, "It is our duty to try to alleviate some of the inflationary aspects through measures that lead to their reduction, especially regarding price differentials."

He mentioned that the Deputy Prime Minister for Economic Affairs and the Ministers of Finance and Transport have been tasked with presenting recommendations on what can be offered "not within the framework of financial windows because we do not have these financial windows in the context of our commitments and financial capabilities and the state's public policy, which does not provide general subsidies but supports towards the needy citizens and not support for goods since we transitioned to adopting the market economy approach and structural reforms."

He added, "Perhaps we have means to limit this inflationary impact by adopting a measure similar to the one we took during the COVID-19 pandemic regarding setting a customs ceiling on the value of containers coming in, to their price and ceiling that was in place before October 7 of last year." He noted that he has directed the implementation of this measure and action.

Ramadan 

Al-Khasawneh emphasized that the Jordanian Armed Forces - the Arab Army, as is their customary practice, have committed to providing essential goods in the markets of the military consumer establishment at their current prices, especially as we approach the blessed month of Ramadan in two months.

In the same context, the prime minister instructed the civil consumer establishments to ensure an abundant and sufficient stock of all essential commodities and to maintain the prices of these basic goods until the end of the blessed month of Ramadan - at least - regardless of the costs associated with it, whether in the civilian or military consumer corporations. He noted that this directive is a fundamental guidance and a governmental decision.

Boosting regulatory measures in markets

The prime minister directed the minister of industry, trade, and supply to tighten regulatory measures in the markets and ensure vigilance and verification to continue maintaining a secure strategic stock of wheat, barley, and all essential commodities, as it is today.

He stated, "It is essential to strengthen regulatory tools and impose full deterrence on any group or a few individuals seeking to engage in speculation and exploit exceptional conditions to impact the citizens' livelihoods and their ability to meet their basic needs."

The minister of transport was also directed to monitor the conditions and regulate the movement of shipping. He pointed out that the regularity of shipping and vessels heading towards the port of Aqaba has not been significantly affected. In other words, maritime traffic continues to operate smoothly, although there are delays due to many shipping companies avoiding the Bab el-Mandeb Strait and opting to go towards the Cape of Good Hope. This results in delays in truck movements rather than a complete halt.

Supply lines

Al-Khasawneh also highlighted efforts to explore alternative options within the framework of what is known as supply lines, noting at the same time that regularity in the arrival of goods is still in place, and there are no impediments.

Some companies that had halted their ships from sailing through the Bab el-Mandeb route have started reconsidering this decision in recent days. The potential inflationary impact may effect Jordan due to the significant increases in shipping and insurance costs, typically reflected by traders in the form of a surcharge on commodity prices.

Central bank 

The prime minister also pointed out that the Central Bank will continue to finance the programs that it began funding during the COVID-19 period, with a total volume of JD 1.2 billion.

Additionally, it may be able to provide some financing windows, not exceeding JD 1 million for the merchant, regarding the provision of essential goods within the framework of financing programs. He commended the efforts of the Central Bank, which intervened to successfully rescue and support some sectors during the pandemic, and, more importantly, to ensure the continuity of the supply of essential goods within the framework of sustainability.

Economy 

Al-Khasawneh emphasized that the regularity of the economic life cycle is fundamentally crucial, stating, "We are in a region where there is military action and clear aggression against our people in the Gaza Strip. However, our economic performance must recover impressionably."

He stressed the need to achieve an economic performance that is similar to or surpasses the outstanding economic performance achieved last year.

"As a government, we take pride in the economic, financial, and monetary performance of the Jordanian state until the last quarter of the previous year, where the economic, financial, and monetary performance of the Jordanian state was exceptionally distinguished compared to the years before the COVID-19 pandemic," he added. 

Tourism sector 

He pointed out that the tourism sector's performance was much better than the baseline year considered as the standard, which is the year 2019. It was possible to achieve an economic growth rate approaching 2.8 percent were it not for the last quarter of the previous year. The same applies to the trade sector, exports, and the trade balance.

The impacts of the last quarter of the previous year and the period after October 7 had significant effects on the overall performance and even on the investment sector.

Humanitarian aid

He pointed to the diligent efforts led by His Majesty King Abdullah to achieve a sustainable ceasefire, deliver humanitarian aid, and launch a comprehensive process leading to the realization of the two-state solution.

According to this solution, the independent and fully sovereign Palestinian state is established along the lines of June 4, 1967, with East Jerusalem as its capital, adhering to fixed and defined timelines and focusing on the unity of the West Bank and Gaza Strip.